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HIGH COURT OF CALCUTTA
P. B. Mukharji
ALUMINIUM CORPORATION OF INDIA LTD. - Appellant
Versus
REGIONAL PROVIDENT FUND COMMISSIONER - Respondent
Matter 5 Of 1958
Decided On : MARCH 31, 1958
EMPLOYEES' PROVIDENT FUNDS ACT - SECTION 19-A - Retrospective application of the Act and Scheme to the applicant's factory is inconsistent with the provisions of the Act and the Scheme, and therefore, bad. The order requiring the applicant to pay employer's share of contribution, administrative charges, damages, and transfer past accumulation to the credit of member employees as on 31st October, 1952 is illegal and inconsistent with the Act and the Scheme.
Fact of the Case:
The Aluminium Corporation of India Ltd. challenged an order issued by the Regional Provident Fund Commissioner under Section 19-A of the Employees' Provident Funds Act, 1952, which retrospectively applied the Act and the Scheme to the applicant's factory from 1st November, 1952. The applicant contended that the order was ultra vires and violated fundamental rights.
Finding of the Court:
The Court held that the retrospective application of the Act and the Scheme to the applicant's factory was inconsistent with the provisions of the Act and the Scheme, and therefore, bad. The order requiring the applicant to pay employer's share of contribution, administrative charges, damages, and transfer past accumulation to the credit of member employees as on 31st October, 1952 was illegal and inconsistent with the Act and the Scheme.
Issues: 1. Whether the retrospective application of the Employees' Provident Funds Act and the Scheme to the applicant's factory was valid? 2. Whether the order requiring the applicant to pay employer's share of contribution, administrative charges, damages, and transfer past accumulation to the credit of member employees as on 31st October, 1952 was legal?
Ratio Decidendi: 1. The Court held that the retrospective application of the Act and the Scheme to the applicant's factory was inconsistent with the provisions of the Act and the Scheme, and therefore, bad. The Court reasoned that the Act and the Scheme were intended to provide provident funds for employees, and that retrospective application would lead to absurdity as many employees had already left the service and taken their provident fund moneys. The Court also held that retrospective application would conflict with the provisions of the Act and the Scheme, such as the requirement that employees become members of the Fund from the date the Scheme comes into force, the requirement that the employee's contribution be equal to the employer's contribution, and the requirement that administrative charges be used to meet the cost of administering the Fund. 2. The Court held that the order requiring the applicant to pay employer's share of contribution, administrative charges, damages, and transfer past accumulation to the credit of member employees as on 31st October, 1952 was illegal and inconsistent with the Act and the Scheme. The Court reasoned that the order was impossible to perform as many employees had already left the service and taken their provident fund moneys, and that there was no provision for retrospective administrative charges when there was no administration.
Final Decision: The Court set aside the order of 23rd October, 1957 and made the Rule for Mandamus absolute by restraining the Regional Provident Fund Commissioner, West Bengal, Calcutta, within the jurisdiction of this Court, and calling upon him to forbear from giving effect to the order and requisition dated 23rd October, 1957 made by him.
( 1 ) THIS is an application by the Aluminium Corporation of India Ltd. under Article 226 of the Constitution. The company complains against an order of the Government, dated 23rd October, 1957 No. R-1237/wb/6983 addressed by the Regional Provident Fund Commissioner at 28, Theatre Road, Calcutta to the Manager of the Aluminium Corporation of India Ltd. This order is purported to be made under Section 19-A of the Employees Provident Funds Act, 1952.
( 2 ) THE material part of that order of the Government of India reads as follows :"it has been decided by the Government of India under Section 19-A of the Employees' Provident Funds Act, 1952 that your factory will come under the purview of the Employees' Provident Funds Act, 1952 and the Scheme framed thereunder with effect from 1st November, 1952. You are requested to comply with all the provisions of the said Scheme with effect from that date. As regards payment of contributions for the pre-discovery period (i. e. from 1st November, 1952 to 31st October, 1956) you are required to pay the employers' share of contributions and administrative charges on both the shares (employers' and employees') together with damages at the rate of 6 1/4 per cent, per annum to the statutory Fund. Regarding payment of the employees' share of contributions for the aforesaid period it may be left to the employees concerned to pay the arrears, if they so desire. You are, therefore, required to pay both employers' and employees' share o contributions from 1st November, 1956 onwards together with administrative charges thereon. It may please be noted that the damages will be levied as usual on all related payments under Section 14-B of the Act. You are also required to transfer the past accumulation to the credit of the member employees as on 31st October, 1952 positively within 30 days from the receipt of this letter as required under paragraph 28 of the Employees' Provident Funds Scheme, 1952 read with Section 15 of the Act. "
( 3 ) ON behalf of the applicant this order has been challenged. Large questions have been raised by the applicant. It has been contended that the company's business or industry does not come within the meaning of the Employees' Provident Funds Act, its Schedule 1 or any of the amendments thereto. For this purpose reliance is placed on the letter of the Government of India, dated 18/19th January, 1953 to the Secretary of the Company stating"i am directed to say that the Corporation is not covered by the head 'electrical, Mechanical or General Engineering Products', if it produces aluminium only as a raw material to be used in the manufacture of different articles of diverse use and applications. "and the Regional Provident Fund Commissioner, West Bengal in Calcutta by letter No. R-1077, dated 23rd March, 1953 committed himself by saying"shri D. P. Datta, Provident Fund Inspector, West Bengal, has ascertained on enquiry that you produce aluminium sheets and circles only and do not manufacture any utensils out of aluminium. I, therefore, hold, subject to confirmation by Government, that your factory does not come within the purview of the Employees' Provident Funds Act, 1952. "
( 4 ) THE other fundamental objection urged by the company against this order is that Ss. 4, 5 and 7 of the Employees Provident Funds Act, 1952 are ultra vires on the ground of excessive and unreasonable delegation. It has been contended that the Central Government's power to add to Schedule 1 of the Act and to include a new industry in the schedule without laying down any standard or norms by the test of which such industry is to be included gives arbitrary and uncontrolled power to the Central Government is bad on the ground of delegation. The same argument is made with respect to Ss. 5 and 7 of the Act relating to the scheme and the modifications of the scheme under the Act.
( 5 ) THIRDLY, it has also been contended that Section 19-A of the Employees' Provident Funds Act is ultra v
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